We are grateful for your leadership of the Consumer Financial Protection Bureau (CFPB) and the positive steps taken as the nation’s first federal agency to protect consumers in the financial marketplace. We, the undersigned community foundations, representing diverse communities across the United States, urge the CFPB to enact comprehensive and stringent federal rules to govern payday lenders.

We are very aware of the harmful effects caused by payday loans that come with triple digit interest rates and a two-week repayment period that can trap consumers in a vicious cycle of debt. The CFPB’s own research confirms this and indicates the typical borrower is indebted for more than 200 days a year and that 75 percent of the fees paid to payday lenders are from borrowers who take out 11 or more loans each year.

On March 26, the CFPB released a draft proposal to rein in abusive short-term, small-dollar loans including payday, auto title and installment loans. The draft would require lenders to verify a borrower’s ability to repay the loan on time, without re-borrowing, while covering basic necessities like rent, food and utilities, prior to making the loan.

This provision would serve as a major safeguard for an industry that historically has exercised little, if any underwriting criteria when making a loan. If mandated in the final rule, this ability to repay standard would help millions of borrowers across the United States avoid high-cost payday loans and other types of abusive loans.

The CFPB has before it a unique opportunity, and indeed obligation, to bring tough regulations and enforcement to the marketplace. As the CFPB moves forward with its rulemaking process, we urge it to consider final rules that would limit the size and duration of loans as well as the number of times lenders could roll over a borrower’s loan during a 12-month period. Finally, we believe the rules should restrict lenders from requiring a post-dated check or electronic access to a borrower’s checking account as a condition of extending credit.

The recent action of the Department of Defense to update the Military Lending Act serves as a powerful reminder that rules need to be comprehensive to block evasions.

We greatly appreciate your attention to this critical issue. We look forward to working with you and the CFPB to protect hard-working individuals and families from payday lending abuses.